Axing GMR contract will send negative signals, India tells Maldives

India Tuesday said the Maldives government's decision to cancel the GMR contract to develop an airport near Male would send "a very negative signal" to foreign investors and urged it to ensure the safety and security of Indian interests and Indian nationals in that country.

The Maldives cabinet Tuesday annulled the agreement made with GMR Group to operate the Ibrahim Nasir International Airport (INIA), at Hulhulé Island nearby capital Malé.

The $500 million contract awarding the airport to GMR Group for 25 years was signed on June 28, 2010, by then president Mohamed Nasheed's government.

The GMR contract "represents the single largest FDI in the history of Maldives", India said, adding the decision to terminate the contract "without due consultation with the company or efforts at arbitration provided for under the agreement sends a very negative signal to foreign investors and the international community".

In a statement, the ministry of external affairs said the Indian government "would continue to remain engaged with the Government of Maldives on this issue, and would expect that the Government of Maldives would fulfil all legal processes and requirements in accordance with the relevant contracts and agreement it has concluded with GMR in this regard". 

India also called upon "the government of Maldives and all concerned parties to ensure that Indian interests in Maldives and the security of Indian nationals are fully protected".

The statement said that India "proposes to monitor the situation in Maldives closely and is prepared to take all necessary measures to ensure the safety and security of its interests and its nationals in the Maldives. The Government of India will continue to be seized of the matter." 

It said that the consortium consisting of GMR and MAHB (Malaysian Airport Authority) had been awarded the contract through a global tender conducted by the International Finance Corporation (IFC), Washington, a member of the World Bank. 

"As the Advisor to the Government of Maldives, the IFC has stated that it has complied with Maldivian laws and regulations and followed international best practices at each step of the bidding process to ensure the highest degree of competitiveness, transparency and credibility of the process."

Earlier, External Affairs Minister Salman Khurshid said: "Whatever legal decision is taken (by Maldives) will have repercussion here." 

Maldives Attorney General Aishath Azima Shakoor announced cancellation of the contract and revealed that the decision has been conveyed to Maldives Airports Company Limited (MACL). GMR has also been informed of the decision, Azima added, according to haveeru online.

The $500-million project was hanging in balance ever since the regime change in the Maldives earlier this year.

After the civil court in the Maldives ruled that GMR cannot charge $27 from passengers as Airport Development Charge (ADC) and insurance surcharge, the Indian infrastructure giant had taken the case to Singapore for arbitration.

GMR was deducting $27 from each passenger since January.

The cabinet's decision came in the wake of increasing pressure from the pro-government political parties to annul the agreement.

The agreement signed between GMR and former president Mohamed Nasheed's government to develop INIA has been labeled as "illegal" by pro-government political parties, who allege it was signed despite objections from the island nation's parliament.

President Mohamed Waheed Hassan told an Indian newspaper that the agreement is a "bad contract" signed "conceivably under dubious conditions" by the previous government, the daily said.

Meanwhile, GMR Male International Airport Ltd (GMIAL) said the "unilateral and completely irrational move" of the Maldives government "is void".

"This unlawful and premature notice on the pretext that the Concession Agreement (CA) is 'void', is completely devoid of any locus standi, and is, therefore, being challenged by the Company before the competent forums. The Company disputes that the CA is 'void'," it said in a statement.